How to deal with debt after a divorce?
by Kevin Craig
(Dallas, Texas, US)
Divorce comes as a really shattering experience, leaving one in a flux of painful emotions. At times, this emotional roller coaster makes it quite difficult to grapple with the situation. And if you have unwanted debt woes ensuing from the divorce, nothing is worse than that.
You and your spouse are equally responsible for anything that you have signed together, such as joint tax returns, joint credit card debts, joint mortgages or loans etc.
The liability remains quite the same even after you get divorced. Credit companies are not bound by divorce decrees, so they can run after you for jointly incurred debt if your former spouse does not pay. And that way the entire liability falls upon your shoulders even post divorce. This may leave you overburdened with debts and cause you to pay far too much of your income on credit cards, store cards and loans.
Many divorced couples learn this the hard way. Hence, it is always advisable that you keep proper track of the debts that you sign together with your spouse.
How To Deal With Debt Problems Arising Out Of Divorce?
1. Cancel all the joint accounts: As soon as you know that your marriage is going to terminate, you must cancel all your joint credit cards and other accounts immediately to ensure that the credit amount does not increase any further.
2. Apply for a new credit card: Get a new credit card for yourself and begin to build your individual credit.
3. Negotiate to settle the interest rate: If a portion or all of a marital debt repayment falls upon your shoulders, immediately contact the lender to negotiate the repayment at a lower interest rate. But if your credit company will not agree to reduce your interest rate then you can opt for debt settlement to get yourself relief from debt burden by the help of a debt attorney or debt settlement law firm.
4. Borrow money to pay off the debt: Attorneys suggest that if you do hold joint debt you may borrow money, in your own name, to pay it off. This way you would be only responsible for individual debt.
5. Determine who is responsible for paying tax due: If you think that the joint tax returns filed by you and your spouse seems to be erroneous, inform this to your attorney without delay. And ask your attorney to add a clause to the agreement stating that whoever is responsible for the errors should be responsible for paying the tax due and or penalties.
Some Tid-Bits You Must Know
1. If your spouse is unable to pay off a debt assigned to him/her in the divorce agreement, the creditor can legally demand that you pay off the due. To make it worse, even the late payments made by your spouse may show up on your credit report.
2. In most states, any debt that was incurred by your spouse before you married is his/her sole responsibility.
3. According to the Federal Trade Commission, a creditor lawfully cannot close down a joint account because of a change in marital status, but may do so at the request of either of the spouses.
Dealing with divorce is hard, but coping with mounting loans entailed by the divorce is even harder. You can divorce your spouse, but unless you take extra measures to guard yourself, avoiding debt from jointly held cards and accounts gets really difficult.
So, even if you find yourself on the verge of a broken marriage, apply a little logic amidst all the overwhelming feelings. However bad your present might seem to you, a practical financial approach will surely protect your future.